CCB, the second largest Chinese lender by assets, will pay about $716 million for a 72% stake in the Sao Paulo-based bank, which, up until now has been controlled by a private family.

Bloomberg

CCB has had its eye on Brazil for quite some time. At one point it was working to set up a subsidiary there, and rumors that it was looking to buy a local bank have circulated since 2011.

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In the wake of the global financial crisis, investors in the West expected Chinese banks to swoop in and take advantage of knock-down valuations by buying up struggling financial institutions. But China’s banks have proven to be extremely cautious – and CCB more cautious still than its two major rivals.

Industrial & Commercial Bank of China Ltd. and Bank of China have a presence spanning the globe, but their approach of expansion has been starkly different. Bank of China moved first, setting up a network of branches that continues to gradually expand. At the end of 2012 it had over 100 branches globally in 36 countries, plus another 500 or so in Hong Kong and Taiwan.

ICBC has instead opted to buy small banks, adding entire branch networks in one swoop. So far it has bought banks in Indonesia, Thailand, the U.S., and Argentina. It also has a 20% stake in South Africa’s Standard Bank.

In contrast, CCB is only in Germany, Luxembourg, Vietnam, South Africa, Australia, the U.S., South Korea, Singapore and Japan. According to its 2012 earnings report, the bank has 76 overseas branches, a figure that includes Hong Kong and Taiwan.

In confirming its stake in the Brazilian bank, a statement from the bank quoted CCB Chairman Zhang Jianguo as saying the strengths he felt his bank brings to the relationship with BIC is “client resources, financial strength, and advantages in infrastructure financing.”

CCB’s broader strategy for global expansion – and how Brazil fits in — remain to be seen. One small Brazilian bank in isolation brings little strategic value—without further overseas acquisitions.

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